OPEC, Russia Show Unified Front on Crude Supply Cuts

OPEC, Russia Show Unified Front on Crude Supply CutsOPEC, Russia Show Unified Front on Crude Supply Cuts

OPEC and non-OPEC oil producers, in an impromptu press briefing, reaffirmed their commitment to their production agreement Tuesday and expressed optimism there would be full compliance.

Saudi Arabia Oil Minister Khalid al-Falih had warned earlier in the day that the kingdom would not bear the burden of the cuts and all 24 partners in the agreement would have to pull their weight. He said Saudi Arabia was now producing below the psychological 10 million barrels a day to keep its end of the bargain, CNBC reported.

After two days of meetings at the CERAWeek conference in Houston, Texas, Falih said he and other ministers had bilateral and other meetings and were committed to their accord to remove 1.8 million barrels from the market.

The global oil industry, including major shale players, were present at the week-long conference, and the question repeatedly for OPEC members and Russia were whether there was compliance to the agreement and whether it might be extended in May.

Flanked by Russian Energy Ministry Alexander Novak, OPEC Secretary-General Mohammad Barkindo, Iraqi Oil Minister Jabar al-Luaibi and Mexico's deputy oil minister Aldo Flores-Quiroga, Falih said he was satisfied with the progress.

Falih said he was quelling concerns raised in Houston about shale production. There had been much talk about whether the resurgence of shale drilling would impact the OPEC agreement, which has stabilized oil prices above $50 per barrel.

"The comeback of shale to a certain degree is not only welcome and acceptable but is necessary because of demand growth and the decline elsewhere," Falih said.

Earlier in the day, Falih told a CERAWeek audience the market can absorb another 3 million to 5 million barrels a day of US oil "over a number of years."

Each minister in the room affirmed commitment to the OPEC agreement. Earlier, Iraq's oil minister said after raising production to 4 million barrels by the middle of 2016, Iraq would reach 5 million barrels a day by the second half of this year.

"I always seek 100% delivery," said Falih during the Tuesday evening press conference. He said that OPEC is not there yet, adding that he has been reassured that the gaps will be filled.

Barkindo said many of the questions revolved around the fact that there is so much inventory remaining. US weekly data shows a consistent glut in the United States and a big pickup of activity among US producers.

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